Core Viewpoint - B of A Securities analyst Wamsi Mohan has revised full-year estimates for Pure Storage, Inc. (PSTG) ahead of its earnings release, forecasting first quarter fiscal 2026 revenue of $772 million and EPS of 26 cents, slightly above Street expectations [1] Group 1: Revenue and Earnings Forecast - The first quarter is typically the company's weakest seasonally, with an average sequential revenue decline of 16% since 2016 [2] - Mohan anticipates a more moderate 12% quarter-over-quarter decline, reflecting continued momentum from FlashBlade/E adoption [3] - The second quarter revenue is estimated at $835 million, slightly below the Street estimate of $839 million [4] Group 2: Operating Margin Insights - The forecasted operating margin for the first fiscal quarter is 10.7%, higher than the Street's estimate of 10.6% and the company's guidance of 10.4% [4] - The primary driver for the stronger-than-expected operating margin is robust subscription margins [4] - The analyst expects PSTG to reiterate its full-year operating margin guidance of 17% [5] Group 3: Market Conditions and Competition - A pause in enterprise IT spending is expected in the second and third quarters of 2025 due to macro uncertainty, impacting IT hardware, especially storage [6] - Increased competition from Dell Technologies' new products and aggressive pricing is anticipated to limit upside in the storage industry [6] Group 4: Long-term EPS Revisions - EPS for FY27 has been revised to $2.07 from $2.06, and FY28 to $2.46 from $2.49 [6] Group 5: Risks and Price Forecast - Upside risks include a faster recovery in the commercial segment, lower flash costs, quicker supply chain recovery, and unexpected market share gains [7] - Downside risks involve an extended economic slowdown, rising costs, intense competition, enterprise migration to the public cloud, and execution challenges [8] - The analyst maintains a Neutral rating with a price forecast of $73, citing that product growth has yet to re-accelerate and competitive pressures present margin risks [9]

Core Insights - EnerSys reported Q4 FY2025 results with a 7% year-over-year revenue increase to $975 million and adjusted diluted EPS of $1.86, marking a record high [1] - The company experienced significant margin expansion across all segments and resilient order trends despite tariff challenges, alongside a leadership transition for strategic execution [1] Margin Expansion - Adjusted gross margin increased by 320 basis points to 31.2%, while adjusted operating margin improved by 360 basis points to 11.1% [2] - Motive Power achieved a record 29% sales mix from maintenance-free products, and the Specialty segment benefited from the Brentronics acquisition, contributing a 22% positive revenue impact [2][3] Tariff Mitigation - Direct tariff exposure was reduced to $92 million from $160 million following a U.S. administration update, with only 5% of U.S. supply sourced from China [4][5] - The company established a cross-functional task force for risk management and aims for full mitigation through pricing, sourcing, and operational expense reductions [4][5] Capital Allocation - EnerSys ended the year with $343 million in cash and equivalents, a leverage ratio of 1.3x EBITDA, and free cash flow of $105 million [6] - The company repurchased $40 million in shares and has approximately $200 million remaining on its buyback authorization, while seeking bolt-on acquisitions [6][7] Future Outlook - For Q1 FY2026, management projects net sales between $830 million and $870 million and adjusted diluted EPS of $2.03 to $2.13, identifying this quarter as the likely revenue and EPS trough for the year [9] - Full-year guidance for FY2026 is suspended pending clarity on tariff policy, but adjusted operating earnings growth is expected to outpace revenue growth [9]

ITT FY Conference Summary Company Overview - **Company**: ITT - **Industry**: Engineering manufacturing, focusing on components for harsh environments across various sectors including automotive, rail, defense, chemical, mining, oil and gas, and energy transition [4][5] Key Financial Highlights - **Q1 Performance**: Generated over $1 billion in orders, with a strong capital deployment strategy including $100 million in share repurchases during Q1 and $500 million year-to-date [5][6] - **Long-term Targets**: - Organic revenue growth of over 5% through 2030 - Total growth target of 10% - Adjusted operating margin of approximately 23% - EBITDA above 25% - EPS target of $11 (organic) or over $12 (total) [8] Growth Strategy - **Organic Growth**: - Targeting 5-7% in Industrial Process (IP), 2-4% in Motion Technologies (MT), and 7-9% in Connect and Control Technologies (CCT) [9] - Emphasis on higher growth and margin businesses, particularly in flow and connectors [11] - **Market Outperformance**: Historically outperformed market growth by 300-400 basis points through execution and innovation [15] - **Margin Expansion**: Aiming for 500 basis points of margin expansion by 2030 through efficiency improvements, automation, and better supply chain management [16][19] Capital Allocation and M&A Strategy - **M&A Focus**: - Targeting high-growth, high-margin businesses with strong management teams - Recent acquisitions include Habony (LNG hydrogen), MicroMode (RF connectors), and Kisaria (aero and defense) [35][36][38] - **Criteria for M&A**: Must have a leading market position and align with ITT's strategic goals [36][37] Innovation and Product Development - **R&D Investment**: Over 4% of revenue allocated to R&D, focusing on continuous improvement and new product development [34] - **New Product Launch**: Introduction of Vida, an embedded motor drive technology aimed at reducing energy waste in industrial pumps, with a projected addressable market of $6 billion [57][61] Segment Performance Insights - **Motion Technologies**: - Friction OE business expected to achieve 400-500 basis points of outgrowth in 2025, with historical outperformance of 700-800 basis points [45][46] - Continuous improvement in productivity and quality is a key focus [51] - **Connect and Control Technologies**: - Recent acquisition of Kisaria expected to drive high single-digit growth and margin progression through synergies with ITT's existing connector business [64][66] Market Outlook - **Book-to-Bill Ratio**: Strong performance in the marine industry with a book-to-bill ratio of 2.0 in Q1, driven by market demand for cleaner energy solutions [54][55] - **Future Growth**: Confidence in double-digit growth for the Svanoy segment, supported by strong order quality and customer loyalty [55] Additional Considerations - **Working Capital Management**: Significant room for improvement in working capital across segments, particularly in IP and CCT, with a focus on inventory management [42][43] - **Intellectual Property Protection**: Strong emphasis on protecting innovations, particularly in new motor technologies, with a competitive edge expected to last several years [71]

+91 226 842 1482 With Nifty nearing 25,000, we are now back to usual business after a dramatic weekend that culminated in India-Pakistan ceasefire (an uneasy calm, but we'll take it). We had advised in our previous notes to buy the dip given instances of sharp market recovery immediately once the escalation is behind. This report marks a return from the geopolitical Nikhil Arela to the fundamental, as we dissect the earnings to see what lies ahead. We retain our nikhil.arela@bernsteinsg.com positive view on ...

Financial Data and Key Metrics Changes - Surgery Partners reported first quarter net revenue of $776 million and adjusted EBITDA of $103.9 million, reflecting an 8% increase in net revenue and nearly 7% growth in adjusted EBITDA compared to the prior year's first quarter [5][18][24] - Same facility revenue growth was over 5%, driven by 6.5% surgical case growth, although there was a slight decline in rates of approximately 1% due to a shift towards lower acuity specialties [6][18] - The company ended the quarter with $229 million in cash and over $615 million in total liquidity, with a net debt to EBITDA ratio of 4.1 times [19][22][23] Business Line Data and Key Metrics Changes - The company performed over 160,000 surgical cases in the first quarter, a 4.5% increase from 2024, with notable growth in gastrointestinal (GI) and orthopedic procedures [18][7] - Orthopedic cases grew by 3.4% year-over-year, with total joint procedures increasing by 22% [8][9] - The company added nearly 50 new physicians in the first quarter, with a focus on orthopedic specialties, which are expected to contribute to higher acuity surgical cases [9][56] Market Data and Key Metrics Changes - The company continues to experience strong growth in Medicare and commercial payer segments, with no significant changes in payer mix reported [40][43] - The company has a robust pipeline of de novo facilities, with 10 currently under construction and a target of 10 new openings each year [10][108] Company Strategy and Development Direction - Surgery Partners focuses on three pillars for growth: organic growth, margin improvement, and capital deployment for mergers and acquisitions (M&A) [4][11] - The company is committed to margin expansion through operational efficiencies and integration of acquired facilities, with a target of maintaining a leverage ratio below 3 times [12][82] - The company is actively monitoring regulatory changes and has minimal exposure to tariff-related price increases, ensuring a stable operational environment [15][70] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's growth trajectory, expecting same facility growth to be at or above the high end of the 6% target for 2025 [6][17] - The company anticipates continued improvements in cash flow generation as the year progresses, despite some headwinds from interest costs [32][36] - Management remains optimistic about the impact of new physician recruits and de novo facilities on future performance [9][56] Other Important Information - Surgery Partners is currently evaluating a nonbinding acquisition proposal from Bain Capital, with a special committee formed to consider the proposal [16] - The company has invested $55 million in five surgical facilities in 2025, with an effective multiple under eight times adjusted EBITDA [12] Q&A Session Summary Question: Current utilization trends and sustainability - Management noted that first quarter same store revenue growth was in line with expectations, with case growth driven by stronger de novos and MSK growth [26][28] Question: Seasonality of free cash flow generation - Management expects overall improvement in operating cash flows as earnings grow, with the second and fourth quarters typically being stronger [31][32] Question: Changes in payer mix and commercial rates - Management confirmed no significant changes in payer mix, with strong commercial growth and constructive negotiations with payers [40][43] Question: Labor dynamics and specialty areas - Management indicated that professional fees were in line with expectations, driven by recent acquisitions, and that anesthesia costs were not a major headwind [51][53] Question: Impact of GI mix on revenue per case - Management acknowledged growth in the GI portfolio but noted that its impact on revenue per case was marginal [60][62] Question: Confidence in tariff exposure - Management expressed confidence in minimal tariff exposure due to strong relationships with suppliers and contract protections [69][72] Question: Free cash flow expectations - Management expects free cash flow to grow alongside business growth, despite some timing issues in the first quarter [91] Question: Margin expansion efforts - Management highlighted ongoing improvements in revenue cycle management and operational efficiencies as key drivers for margin expansion [94][96]

Financial Data and Key Metrics Changes - First quarter revenue increased by 4% to $1.5 billion compared to the prior year, driven by adjusted admissions growth of 2.7% and net patient service revenue per adjusted admission growth of 1.2% [12][14] - Adjusted EBITDA grew by 2.5% to $98 million, with growth impacted by an increase in payer claim denials compared to the first quarter of 2024 [15][18] - Total cash at the end of the first quarter was $495 million, with total debt outstanding at $1.1 billion, resulting in total available liquidity of $790 million [17] Business Line Data and Key Metrics Changes - Admissions grew by 7.6%, with inpatient surgery growth at 3.4% and outpatient surgeries declining by 2.3% [6][14] - Supply costs as a percentage of revenue declined by 60 basis points year over year, indicating improved supply chain efficiencies [8] - The growth rate of physician professional fees was 6%, down from 13% during the same period last year [8] Market Data and Key Metrics Changes - The company is experiencing strong demand trends in its existing markets, with an average market growth rate of about 3% per year [40] - Exchange volume growth was significant, with admissions in the quarter growing by 40%, contributing to mid-single digits as a percentage of revenue [61] Company Strategy and Development Direction - The company is focused on expanding its outpatient and acute care hospital footprint, supported by approximately $500 million in cash and a favorable lease-adjusted net leverage ratio of three times [5][10] - The company is actively pursuing M&A opportunities, with increased interest in its joint venture model from potential academic and non-profit partners [9][10] - The strategic focus includes operational excellence initiatives aimed at driving margin expansion over the next several years [20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the durability of demand, attributing strong volume growth to operational improvements and the strength of the markets [40] - The company is optimistic about achieving its full-year 2025 financial guidance, reaffirming its outlook based on solid Q1 performance [18][19] - Management noted that while there are pressures from professional fees and payer behaviors, they expect underlying EBITDA growth to accelerate in the latter half of the year [15][72] Other Important Information - The company is in the final stages of recruiting a Chief Development Officer to support its focus on M&A activities [5] - The company’s credit rating was upgraded to B+ from B, reflecting improved net leverage and cash flow profile [17] Q&A Session Summary Question: Inquiry about seasonality and EBITDA decline - Management indicated that the sequential decline in EBITDA is not abnormal and attributed it to various seasonal factors, including the impact of flu season and timing of payments [23][25] Question: Follow-up on elevated denials - Management confirmed that the elevated denials are consistent with previous trends and noted a slowdown in payments even on clean claims [27][29] Question: Supply chain initiatives and opportunities - Management highlighted participation in a GPO and ongoing improvements in service line utilization as key areas for margin expansion [31][32] Question: Update on expansion initiatives - Management reported a growing pipeline for new market opportunities and emphasized the importance of being disciplined in evaluating potential acquisitions [45][47] Question: New Mexico DPP program approval timeline - Management expressed hope for approval by Q2, noting positive signs from discussions with elected officials [56][58] Question: Exchange volumes and payer mix - Management confirmed strong exchange growth, with admissions in Q1 growing significantly and operating in mid-single digits as a percentage of revenue [60][61]

Financial Data and Key Metrics Changes - Revenue for the first quarter was $206 million, an 11% increase year over year, and at the high end of the company's range [5] - Adjusted net income rose to $17 million from $2 million last year, while adjusted EBITDA increased to $30.7 million from $17.6 million [5][12] - Adjusted EBITDA margin was approximately 15% of sales, consistent with the previous quarter [5] - Gross profit increased by 28% year over year to $60.8 million, with gross margin expanding to 29.5% from 25.7% [13] Business Line Data and Key Metrics Changes - Aerospace segment revenue reached $191.4 million, a 17% increase year over year, with adjusted operating profit of $31 million [9][17] - Test segment sales were $14.6 million, down from the previous year, resulting in an adjusted operating loss of $1.5 million due to a $1.9 million adjustment on a long-term contract [9][18] Market Data and Key Metrics Changes - First quarter bookings were strong at $280 million, yielding a book-to-bill ratio of 1.36, with a record backlog [6] - Military sales in the Aerospace segment nearly doubled, up 95%, driven by the FLRAA program [16] Company Strategy and Development Direction - The company remains focused on margin expansion, free cash flow generation, and continuous improvement [23] - There is an ongoing review of business segments to assess potential restructuring or product management strategies [34] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the revenue forecast for 2025, maintaining a range of $820 million to $860 million, while acknowledging potential upside and downside risks [25][26] - The company is preparing for potential tariff impacts, estimating obligations between $10 million to $20 million, and is considering various strategies to mitigate these effects [26][27] Other Important Information - Operating cash flow improved significantly to $20.6 million from $2 million in the previous year [19] - Long-term debt net of cash was reduced to $134.2 million, with total liquidity at approximately $194 million [21][22] Q&A Session Summary Question: How much mitigation can be done this year to offset the tariff impact? - Management indicated it is difficult to quantify timing without knowing the exact tariffs, but they are considering various alternatives [30][31] Question: Does the review of each business indicate potential restructuring? - Management stated the review could lead to restructuring or product management changes, but it is premature to discuss specifics [34] Question: What are the expectations regarding Boeing's production needs? - Management has not heard of major changes from Boeing and is encouraged by their production progress [37] Question: Can more detail be provided on demand growth from airlines versus OEMs? - Demand has been strong from both airlines and OEMs, with commercial transport sales being roughly 50% line fit and 50% aftermarket [45] Question: Is the $1.9 million charge in the Test segment contained? - There is potential risk associated with the charge, and management is conducting a review to assess the situation [48] Question: What is the worst-case scenario for legal fees related to the UK settlement? - The worst-case estimate for legal fees is around $7.2 million, with the overall situation being better than initially feared [50]

Financial Data and Key Metrics Changes - The company reported organic revenue growth of 10% and total revenue of $413.4 million for the first quarter [11] - Adjusted EBITDA for the first quarter rose 12% to $113.8 million compared to $101.7 million in the prior year period [11] - Adjusted diluted earnings per share grew by 16% [4] - Adjusted free cash flow was $26 million, up 6% from the prior year period [5][13] - GAAP net income for the first quarter was $24.9 million, or GAAP diluted earnings per share of $0.20 [11] Business Line Data and Key Metrics Changes - Insurance Advisory Solutions (IAS) experienced organic revenue growth of 3% [11] - Underwriting Capacity and Technology Solutions (UCTS) saw organic revenue growth accelerate to 32% compared to 21% in the prior year [6][11] - Main Street Insurance Solutions (MIS) delivered total organic revenue growth of 10% [9][11] Market Data and Key Metrics Changes - The IAS business faced a negative impact of 3.5% from rate and exposure changes, compared to a positive 4.5% in the prior year [6] - Client retention improved year over year to approximately 92% [6] - The company noted a more competitive insurance rate environment affecting renewals, particularly in large coastal property [6] Company Strategy and Development Direction - The company aims to vertically integrate across the value chain and bring innovative third-party risk capital solutions to market [8] - The introduction of the Builder Reciprocal Insurance Exchange is expected to support growth in the builder channel [8] - The company remains confident in its ability to maintain double-digit organic revenue growth despite macroeconomic uncertainties [9][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience and durability of the business model amid macroeconomic uncertainty [9] - The company anticipates organic revenue growth in the IAS business in the mid to high single-digit range for the year [15] - Management expects adjusted EBITDA between $83 million and $88 million for the second quarter [15] Other Important Information - The company paid $123 million in earn-outs in cash during the first quarter and expects to pay an additional $22 million in the second quarter [5][13] - Net leverage increased slightly to 4.2 times due to significant earn-out payments, but the company aims to bring it below four times by the third quarter [14] Q&A Session Summary Question: Concerns about IAS business performance - Management acknowledged the IAS business was below expectations due to project-based headwinds and a negative impact on renewal premiums, but remains confident in the underlying fundamentals [20][21] Question: Cash flow conversion rate targets - The target for free cash flow conversion rate remains between 50% and 70% over time, with expectations for normalization in subsequent quarters [25][26] Question: Expectations for organic growth acceleration - Management indicated that organic growth is expected to build through the year, particularly in the IAS business, as project-based revenues normalize [53] Question: Market conditions in Florida - Management noted that the Florida insurance market is healthier due to tort reforms, but the cost of risk is expected to grow over time due to increasing building costs and climate event volatility [45] Question: Performance of Juniper Re - Juniper Re is performing well, contributing high single-digit millions in revenue on an LTM basis, with significant strategic value for accessing capacity [57] Question: Impact of wildfires on contingent commissions - There was no significant negative impact from wildfires on contingent commissions, as contracts are tied to non-catastrophe losses [78]

Financial Data and Key Metrics Changes - The company reported a 15% growth in adjusted EBITDA, with a margin expansion of 260 basis points and a 9% increase in free cash flow [4][6][21] - Total transaction volume increased by 4%, while total transaction value (TTV) grew by 5% to reach €8.3 billion [9][10] - Revenue rose by 4% to €621 million, driven by solid transaction growth and increased demand for products and services [9][21] Business Line Data and Key Metrics Changes - Transaction growth was stronger with global multinational customers, up 6%, while small and medium enterprises (SME) saw slower growth at 2% [11][12] - Hotel transactions grew by 5%, outpacing air transactions which grew by 2% [13] - The company maintained a high customer retention rate of 96% over the last twelve months [15] Market Data and Key Metrics Changes - Transaction growth was 3% in The Americas, 4% in EMEA, and 7% in Asia Pacific [14] - The U.S. air TTV growth was 3%, consistent with major U.S. airlines' commentary on corporate spend growth [12] - The meetings and events business saw a 2% year-over-year increase in the number of meetings and an 8% increase in spend for full year 2025 [33][60] Company Strategy and Development Direction - The company is focused on maintaining strong earnings growth, margin expansion, and cash generation despite economic uncertainty [5][6] - Continued investment in technology transformation, including automation and AI, is aimed at improving customer experience and productivity [16][30] - The capital allocation strategy includes a $300 million share buyback authorization and a focus on M&A opportunities [43][44] Management's Comments on Operating Environment and Future Outlook - Management noted more economic uncertainty and less visibility for the full year but expressed confidence in the company's long-term growth prospects [6][25] - The company expects business travel demand from its premium customer base to grow above GDP, with a focus on share gains and operating efficiency [25][39] - Adjusted EBITDA is expected to grow faster than revenue, with a full-year midpoint adjusted EBITDA guidance of $510 million, representing a 7% growth [40][41] Other Important Information - The company received two credit rating upgrades during the quarter, reflecting strong momentum [24] - Adjusted operating expenses declined by 1% year-over-year, demonstrating effective cost control [19][23] - The merger agreement with CWT was amended to reduce the purchase price and the number of shares issued [19][43] Q&A Session Summary Question: Have you witnessed any trade down in accommodations by your underlying clients? - Management indicated that premium and international volumes held up better than domestic, with a slight increase in average ticket prices and hotel rates [47][48] Question: Can you comment on SME wins and transaction values? - Management noted that while SME wins rose, organic growth in the SME segment has been lower due to tightened spending controls [50][51] Question: What is the next milestone for the CWT merger process? - The fact discovery process will be complete in early June, with a trial set for September 8, aiming for closure by the end of 2025 [52] Question: How has the macro environment evolved intra-quarter? - Management observed a stable trend in transaction growth, with most customers in a wait-and-see mode regarding travel policies and budgets [58][60] Question: What steps can be taken to increase the value proposition to clients? - Management emphasized that the company helps customers save money and provides comprehensive content access, which strengthens its value proposition in a weaker economic environment [64]

Union Pacific (UNP) FY Conference Summary Industry Overview - The conference focuses on the railroad industry, specifically Union Pacific (UNP) and its operational strategies and financial outlook. Core Points and Arguments 1. **Strategic Foundation**: Union Pacific emphasizes safety as its primary focus, which is crucial for employees, customers, and communities [2][3] 2. **Growth Targets**: The company aims to grow its business volumes faster than the markets it serves, with a commitment to improving revenues through effective pricing strategies [5][6] 3. **Financial Goals**: Union Pacific targets high single-digit to low double-digit growth in earnings per share (EPS) over the next three years, with a commitment to maintaining the best operating ratio and return on invested capital (ROIC) in the industry [7][8] 4. **Capital Investment**: The company plans to invest between $3.4 billion and $3.7 billion annually, with a 45% dividend payout ratio, continuing a track record of increasing dividends for 17 consecutive years [8][9] 5. **Share Repurchases**: Union Pacific intends to repurchase between $4 billion and $5 billion of its shares annually over the next three years [10] 6. **Volume Performance**: In April, Union Pacific reported a 7% year-over-year increase in volumes, with international intermodal volumes up over 30% [14][15] 7. **Market Diversification**: The company operates across 23 states, allowing it to offset declines in specific areas with growth in others, particularly in international intermodal and coal segments [16][26] 8. **Freight Mix**: International intermodal is identified as the lowest average revenue per car business, while coal volumes were up 5% in the first quarter, but still below the system average [22][23] 9. **Investment in Mexico**: Union Pacific owns 26% of a Mexican railroad, which has seen significant growth in automotive and intermodal sectors, positioning the company well for nearshoring opportunities [32][34] 10. **Adaptive Planning Technology**: The company is developing adaptive planning technology to improve operational efficiency, akin to navigation apps that suggest optimal routes [54][55] 11. **Competitive Landscape**: Union Pacific acknowledges the potential threat from EV trucking and autonomous vehicles but believes its existing infrastructure and technology will maintain its competitive edge [58][60] Additional Important Insights - **Regulatory Environment**: The company operates under strict regulations regarding mergers and acquisitions, which can impact growth strategies [42][43] - **Market Challenges**: Union Pacific faces challenges from fluctuating coal demand and international trade tariffs, which may affect future growth [11][12][49] - **Operational Efficiency**: The focus on improving margins through pricing and productivity is critical, especially as the industry faces flat growth overall [48][50] This summary encapsulates the key points discussed during the Union Pacific FY Conference, highlighting the company's strategic focus, financial goals, and operational challenges within the railroad industry.